The Midas Touch

Anyone who builds in California—be it homes, hotels or retail stores—knows it’s a tough place to do business. The permitting process is rigorous, land acquisition is more competitive than perhaps anywhere else in the nation and construction costs are sky high. Yet the obstacles are hardly stopping retailers and developers from expanding the state’s retail offerings.

Big-box retailers are perhaps the state’s most aggressive expanders. Of Best Buy’s 800-plus units, the largest amount of retail square footage is in California. The same is true of Bed Bath & Beyond. And, though Lowe’s home improvement warehouse is a Southeastern company, with the bulk of its stores along the Eastern seaboard, its Western openings in 2007 are exceeded only by its growth in the Northeast. In fact, for the Mooresville, N.C.-based, 1,400-store retailer, California will likely play a major role in its quest to reach and surpass the 2,000-store mark.

Solana Beach Towne Centre

Location: Solana Beach (San Diego), Calif.

Size: 252,000-sq.-ft. community center

Developer: American Assets, Inc.

Major tenants: Henry’s Marketplace, Marshalls, CVS Pharmacy, Dixieline Lumber, and more than 50 shops and restaurants

Status: A three-phase redevelopment of the circa-1970’s center started in 2006; phase 3, which is expected to be completed in 2008, will demolish an existing building and provide the same facelift the rest of the center has received.

In the highly coveted San Diego real estate market, where many desire to be but few have secured a foothold, American Assets has built a successful history with six prime shopping center—including Solana Beach Town Centre, which began a $6 million renovation and re-tenanting effort in 2006. Located in the upscale beachside community of Solana Beach, the center has been serving local residents since the ‘70s, but ownership felt that the facades, landscaping and paint palette could all benefit from an update to keep pace with the surrounding community.

Status: The project will break ground in spring 2008 and is scheduled to open spring 2009.

Located in a densely populated area in the hub of the San Gabriel Valley, Santa Fe Trail Plaza offers an ideal location in a strong market. Featuring great design, Santa Barbara mission-style architecture and a dynamic mix of retailers and restaurants, the project will integrate with the existing downtown Valley Mall and become an integral part of the community.

And then there’s Target. With more than 200 stores and 26 million-plus sq. ft. in California, its Golden State presence doubles its number of Florida doors, and more than triples the number of stores in its home state of Minnesota.

That California is the nation’s most-populated state makes it no great surprise that national retailers cluster a high percentage of their store counts there. But many retailers and developers will tell you it’s more than the population that’s a draw; California’s unabated growth, its diverse economy and active Pacific Rim trade largely shelter the state from economic downturn. That, of course, is very attractive to retailers.

“When you have the growth, you have new opportunities,” said Dave Mossman, executive VP of development and acquisitions for Costa Mesa, Calif.-based Donahue Schriber. Much of the company’s California activity, said Mossman, is in Sacramento and the Central Valley—and big-box anchors are driving more power-center development. “The Targets, the Wal-Marts, the home-improvement retailers have increased their California presence and are going to continue to,” said Mossman. “They still have a big appetite.”

The Promenade at Howard Hughes Center

Location: West Los Angeles, Calif.

Size: 247,833 sq. ft.

Developer: Passco Cos., LLC

Major tenants: Notable tenants include a 17-screen “The Bridge” Theaters, which features a state-of-the-art IMAX theater, stadium seating, reserved-seating options and an upscale lounge and bar. Other tenants include Borders Books & Music and Nordstrom Rack, with the center also boasting an excellent mix of restaurants and specialty food purveyors including Starbucks, Johnny Rockets, Rocky Mountain Chocolate Factory, Ben & Jerry’s, On The Border, Marie Callender’s, Subway, Islands, Rubio’s and Mrs. Fields.

Status: The Promenade is completed and opened in 2001.

Located just off the Interstate 405 freeway, The Promenade at Howard Hughes Center offers tenants many desirable amenities, including safe and monitored parking facilities; lush, beautifully landscaped common areas; modern office buildings; state-of-the-art office spaces with large windows; lobby attendants; and a plethora of coffee shops, restaurants and retail stores.

The Promenade’s open-air plan allows visitors to soak up the California sun while stopping to grab a cup of coffee or a bite to eat. The Promenade is landscaped with beautiful flowers and boasts a host of outdoor eating areas.

The Shoppes at Chino Hills

Location: Chino Hills, Calif.

Size: 370,000 sq. ft. on a 58-acre site

Developer: Opus West Corp., a regional company within The Opus Group, is developing and constructing the project, which was designed by Altoon + Porter.

Major tenants: The Shoppes at Chino Hills has secured several tenants, including Barnes & Noble, Trader Joe’s, Banana Republic, J. Jill, Active Ride/Sport, Coldwater Creek, California Pizza Kitchen, American Eagle and Pinkberry, and is in negotiation with several upscale national retailers.

Status: Construction is under way and the project is slated for completion in May 2008.

The Shoppes at Chino Hills, a 430,000-sq.-ft. lifestyle center, is located in one of the Inland Empire’s most affluent areas. The Shoppes at Chino Hills will feature outdoor shopping along landscaped streets, offering store-adjacent parking and a pedestrian-only promenade with shaded seating and fountains.

The area’s upscale demographics have attracted a strong national tenant roster. “This lifestyle center was designed as a town center to include 50,000 sq. ft. of offices above retail, a 200,000-sq.-ft. Chino Hills Civic Center with police and fire departments, a library and city hall,” said Paul Marshall, division president of Opus West-Southern California. Construction commenced this spring and project completion is slated for next summer.

Donahue Schriber’s Countryside Marketplace in Riverside County is anchored by Target, Lowe’s and Kohl’s. Construction on the 70-acre-plus power center is under way, with a projected fall 2008 completion date. Another project, Orchard Walk in Visalia, Calif., is anchored by Target and The Home Depot and is slated for a spring 2008 or early 2009 opening.

Strategic relationships with California developers have helped Target expedite its West Coast expansion. A deepening relationship with Upland, Calif.-based Lewis Retail Centers has resulted in four Target-anchored centers currently under construction, with two more under discussion. “Target centers, especially when you consider they can be 300,000 to 400,000 sq. ft., comprise a big part of our pipeline,” said Randall Lewis, executive VP of Lewis Retail. “Target is a great example of ‘If you do a good job, good things will happen.’” Lewis is referring not just to Target’s success in California, but to Lewis Retail’s as well. “If you do a good job not just for a retailer, but for a city, word spreads,” said Lewis. City economic development directors share information, resulting in new business for developers like Lewis—and new site opportunities for retailers.

Major tenants: Planned components include retail, restaurant, entertainment, office, fitness and a four-star hotel and conference facility. The project will feature a book store, multi-screen cinema and a gourmet grocery store, as well as first-to-market restaurants.

Status: Construction is slated to start in fourth-quarter 2008, with first-phase opening in October 2009.

The Golden Triangle will feature a Main Street design, creating a shopping and entertainment experience that includes shopping, eating at a white-tablecloth restaurant or relaxing and sipping a cup of coffee at a streetside cafe.

Located at the merger of two major interstate freeways—Interstates 215 and 15—the project will enjoy great visibility and accessibility, as the freeways are traveled by more than 203,000 daily commuters, which represents in excess of 6 million potential shoppers a month.

Other new opportunities are coming in the form of mixed-use development. According to Brian Jones, president and CEO, West Coast commercial development, of Cleveland-based Forest City Enterprises, not just mixed-use, but multi-use too, is a huge trend in California, and around the nation. “To execute mixed-use and multi-use projects is clearly a trend in California and all over the country.”

Forest City’s greatest opportunities in California have come not only from mining potential mixed-use markets, but also from examining its current California portfolio and uncovering redevelopment needs. Temecula, Calif., is an example. “We opened a project in Temecula in 1999, and in the last 10 years huge growth has taken place in the market,” said Jones. Forest City has added a lifestyle component, The Promenade Temecula, to the existing million-plus-sq.-ft. mall to better serve the expanded market.

Perhaps most notable of Forest City’s California projects is one that was developed in partnership with Lewis Retail—Victoria Gardens, in Rancho Cucamonga, Calif., which includes 1.3 million sq. ft. of retail and office as well as 20 acres of multi-family housing—with more to come. “We have an ongoing plan for Victoria Gardens that includes building additional components—office, residential and retail, eventually a hotel—so this is really becoming what I would call a true multi-use project with some mixed-use components to it,” said Jones. “We would love to find more opportunities like Victoria Gardens—not just a pure retail play, but a large, long-term community.”

The District at Tustin Legacy, a 1 million-sq.-ft. lifestyle and entertainment retail village, offers shoppers a stylish new destination on the site of the former Marine Corps Air Station in Tustin, Calif. Architectural details and distinctive landscaping and signage set the artistic standard for the site; new gateway portals, water features and monument signage announce entry to The District and provide a visual gateway for the City of Tustin.

The District at Tustin Legacy will feature outdoor living rooms with fireplaces, pop-jet fountains, giant video walls, a performance stage, lush landscape and extensive pedestrian walk-ways and bike paths that will connect The District at Tustin Legacy with other components of the Tustin Legacy project.

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